New data is backing up Erlich Bachman’s recent claim on “Silicon Valley” that virtual reality is “the frothiest space in the valley right now. Nobody understands it but everyone wants in. Any idiot could walk into a f—ing room, utter the letters ‘v’ and ‘r’, and [venture capitalists] would hurl bricks of cash at them.”
Add augmented reality to that statement and it’d be spot on. More than $800 million was invested in AR and VR in the second quarter of 2017, according to Digi-Capital, an AR-VR consulting firm.
This was a major jump from Q1, when “only” $300 million was poured into the budding industries. Altogether, there has been north of $2 billion invested in AR and VR in the past year.
Most AR and VR investments come during the early stages of a startup, but there were several major deals between April and June that made it a strong quarter. UK-based VR gaming company Improbable netted more than $500 million — at a $1 billion valuation — from SoftBank back in May.
But its more than video games that are drawing investment dollars. In an email to TheWrap, Digi-Capital founder and managing director Tim Merel outlined the five sectors with the most AR-VR investment: tech, video, games, peripherals and smartglasses.
The report also pointed to an expected uptick in investment, with Apple’s latest iOS enabling developers to create AR apps with its ARKit. For many in the industry, the move by Apple is going to help bring AR to the mainstream.
“It’s a huge thing,” said Chris Milk, CEO of Within VR, in an interview with TheWrap. “Granted, it’s the beginning of AR through a phone or a tablet. But it’s introducing people to a completely new concept, and a new form of medium that does not have a storytelling structure.”
With Facebook and Google — and not to mention, Snap — looking to join Apple in pushing the medium forward, Digi-Capital predicts more than $60 billion in revenue and one billion users of mobile AR in five years.
And while Q2 was a major leap from Q1 this year, it still lagged behind its peak months from 2016, when $1.2 billion was raised within the first quarter of the year.